The California housing market is a hot topic, sparking discussions and analyses among realtors and market experts as the summer season draws near.
Throughout the country, experts are predicting a more conservative increase in home prices for 2024 and 2025 compared to earlier projections. The Federal Home Loan Mortgage Corporation has forecasted that home prices in the U.S. will increase by .5 this year and in 2025, which differs from their original prediction at the beginning of the year that they would raise by 2.8% this year and 2% next year. However, in California, home prices are expected to increase by a whopping 6.2% according to the California Association of Realtors. This trend is influenced by factors like decreasing mortgage rates, economic expansion, and continued strong demand.
However, despite this optimistic outlook, concerns about housing affordability remain with expectations of a flat trajectory. Real estate professionals foresee shifts in market dynamics concerning demand, mortgage rates, and home prices. The introduction of more affordable and compact housing options, particularly in Southern California, is likely to attract prospective buyers, while increased seller activity is gradually replenishing housing inventory. These developments suggest a potential rebalancing of the market, especially between supply and demand.
Tips:
- In 2024, prospective homebuyers may see elevated home prices and should anticipate moderately reduced mortgage rates in the latter part of the year.
- It’s advisable for buyers to start preparations as soon as possible, focusing on saving funds and improving their credit.
- Research accessible mortgage programs and options for down payment assistance can increase overall affordability.
What are the predictions for home prices in California for 2024?
Experts anticipate a continued rise in home prices throughout 2024. Despite low home inventory across the US, which consistently supports home prices, fluctuating mortgage rates and last year’s decreased demand haven’t significantly lowered prices. With rates expected to decrease in the latter half of 2024, demand may rise again, but any potential decrease in home prices is unlikely to notably enhance affordability.
Will mortgage rates go down in 2024 in California?
In February 2024, mortgage rates hit 6.9% and continue to approach seven percent. Experts believe rates will stay above 6% but are expected to stabilize in the second half of the year, and base rates will drop to 3.5-4% by the end of 2025. According to a housing and economic forecast by the California Association of Realtors, slower economic growth and cooling inflation are expected to lower mortgage interest rates in 2024, creating a more favorable market environment to boost California home sales next year.
Are there enough homes for sale to meet buyer demand?
In April 2024, home prices in California increased by 11.8% compared to the previous year, with a median price of $852,900. The number of homes sold also rose by 13.3% year-over-year, totaling 24,640 homes sold in April, up from 21,743 homes in April of last year. The median days on the market was 27 days.
Will home sellers return to the market in 2024?
Yes, sellers who stayed on the sidelines in 2023 are expected to return to the market, particularly those needing to relocate for new jobs or seeking more affordable areas. Experts, known for accurately predicting the 2008 financial crisis, forecast that baby boomers looking to downsize will contribute up to 30 million housing units.
How competitive is the market?
In April 2024, 49.1% of homes in California sold above list price, marking a 5.1-point increase compared to the previous year. Additionally, 23.3% of homes experienced price drops, up from 17.0% in April last year. The sale-to-list price ratio was 101.5%, up by 1.0 point year over year.
Although 2024 is anticipated to improve the housing market in several ways, many buyers will still face challenges with affordability. If you’re planning to purchase a house this year, here’s some tips to prepare given the information about the 2024 housing market predictions.
5 Tips to Prepare for Buying a Home in 2024
Prepare Your Finances:
With home prices expected to stay high and mortgage rates potentially remaining stagnant until later in the year, focus on improving your credit score and lowering your debt-to-income ratio. Pay off high-interest credit card balances and consider consolidating or refinancing debts to secure a lower rate.
Explore Affordable Mortgage Options:
Research mortgages tailored for first-time buyers and inquire about down payment assistance programs. Conventional loans may require as little as 3% down, while FHA, USDA, and VA loans offer even lower or no down payment options. Investigate lenders offering specialized mortgage programs with additional grants or assistance.
Time Your Purchase Strategically:
Consider your priorities when determining the best time to buy. Spring and summer offer more inventory but come with increased competition. If securing the lowest rate is your priority, consider waiting until later in the year or even 2025 when rates are expected to fall.
Avoid Hasty Decisions:
If market conditions become favorable for buyers, take your time to make informed decisions. Take your time and don’t rush if you feel uncertain. Continue monitoring the market trends and keep saving money until you’re ready.
Build Your Savings:
Increase your savings to cover down payments, closing costs, and unexpected expenses associated with homeownership. While many mortgage programs allow for low down payments, a larger down payment can improve your interest rate and make your offer more appealing to sellers.